Telkom's share price has dropped by more than 9% over the last two hours, following the publication of a trading update which projected big earnings declines.
The company advised customers that headline earnings per share (HEPS) and reported basic earnings per share (BEPS) reflected in its interim results for the six months ended 30 September are expected to decrease by 30-40% compared to the same period last year.
"This is due to a significant increase in net finance charges and fair value movement of between 120% to 130% from R443 million reported in the prior year impacted by the International Financial Reporting Standards (IFRS16) on finance charges," Telkom said in a statement.
"Excluding the impact of IFRS16, net finance charges and fair value movement increased between 80% to 90% from R443 million reported in the prior year."
The company said the increase in finance charges relates largely to increased borrowing in support of the investment in its mobile business.
It added that the impact of IFRS16 on profit after tax was immaterial between R50 million to R60 million.
Telkom's share price took a steep dive following this trading update and had fallen by over 9% at the time of writing.
Telkom's interim results for the six months ended 30 September 2019 will be published on 12 November 2019.